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- GDP (PPP):
- $2.4 billion
- 2.9% growth
- 5.9% 5-year compound annual growth
- $25,607 per capita
- Inflation (CPI):
- FDI Inflow:
Seychelles, a remote, small island economy, has made a notable turnaround in restoring fiscal sustainability and laying some groundwork for more dynamic engagement in global commerce. In April 2015, two decades after first applying, the country finally became a member of the World Trade Organization. WTO accession underscores Seychelles’ progress in economic and political reform, particularly since the 2008 debt crisis.
Economic Freedom Snapshot
- 2016 Economic Freedom Score: 62.2 (up 4.7 points)
- Economic Freedom Status: Moderately Free
- Global Ranking: 76th
- Regional Ranking: 6th in Sub-Saharan Africa
- Notable Successes: Trade Freedom and Monetary Freedom
- Concerns: Rule of Law, Investment Freedom, and Financial Freedom
- Overall Score Change Since 2012: +9.2
Despite progress, institutional weaknesses stemming from an inefficient legal framework and pervasive corruption continue to undercut the prospects for stable long-term economic development, hampering the emergence of dynamic private-sector activity other than in tourism.
The Seychelles People’s Progressive Front, now known as the People’s Party, has ruled Seychelles since 1977 when France-Albert René seized power in a bloodless coup. In 2004, René ceded power to Vice President James Michel. Michel was elected to a five-year term in 2006 and again in 2011. Seychelles enjoys a relatively stable economic environment as a high-middle-income country with lucrative fishing and tourism industries. Piracy has declined significantly as a threat off the coast. In early 2013, tropical cyclone Felleng destroyed hundreds of homes.
Concerns about government corruption have focused on a lack of transparency in the privatization and allocation of government-owned land as well as dysfunction in government finances, illegal procedures, and embezzlement. In August 2014, Seychelles was accepted as a candidate country by the Extractive Industries Transparency Initiative. Judges generally decide cases fairly but face pressure in high-level economic and political cases.
The personal income tax rate is a flat 15 percent, and the top corporate tax rate is 33 percent. Other taxes include an interest tax, a vehicle tax, and a newly introduced value-added tax. The overall tax burden equals 27.5 percent of GDP. Government spending amounts to 35.6 percent of GDP. The budget is in slight surplus, and public debt equals about 65 percent of total domestic output.
Launching a business takes 10 procedures, and no minimum capital is required. The cost of completing licensing requirements has been reduced to about 25 percent of the level of average annual income. The inefficient public sector accounts for around 40 percent of total employment. Businesses complain that they are held back by the high cost of electricity, which results in part from cross-subsidies.
Seychelles’ average tariff rate was 3.3 percent as of 2013. State-owned enterprises operate in several sectors of the economy. Foreign investors may lease but not own land, and investment in some industries is restricted. The financial sector remains rudimentary. A large part of the population lacks access to formal banking services, and limited capacity for lending to the private sector inhibits growth.